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A Santa Rally is Highly Unlikely

So, it appears that China and the U.S. have decided to play nice, which is all good and civilized, but unfortunately the stock market is powered by earnings and future expectations. Fundamentally speaking, nothing has changed. We still have high corporate debt levels and the possibility that trade hostilities will resume in January because we live in the age of Trump and we don’t know where he will draw the line.

Today’s rally has to hold, but if we fade at the closing, this will reconfirm many of our fears. The momentum was clearly negative to begin with and traders will use this as an opportunity to dump stocks. In times like this, it’s better to think in terms of years not days or weeks. It’s the only way to survive. 

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